What are the Chinese going to do now there's no point in them investing in the bust American economy?
Blood and Treasure says the old men on the Central Committee, having gone through Stalinism and market orientated development, are being advised to try social democracy.
Caijing- which B& T calls " China's version of the Economist and " a kind of external brain of the Chinese economic apparatus" reports:
"The government's main priority will now be to introduce policies to prevent a hard landing and this will be the focus of the meeting of Communist Party leaders in November. Caijing notes that because of the US financial crisis a prolonged slowdown in export growth is to be expected. They suggest policies to strengthen domestic demand are the best and most likely option for the government. In particular they propose: 1. expanding medical insurance and constructing a rural health care network; 2. increasing the provision of affordable housing; 3. an end to control of food prices combined with food subsidies for poor people; and 4. a tax cut for middle income families to help boost domestic consumption. With these policies, GDP growth could be increased by 1.5-2% - enabling China to achieve GDP growth in 2009 of 8.5%-9.5%. "